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People shouldn't need to pay attention to what their bank is doing. That is what regulators are for. Having to constantly review bank financial statements to de

People shouldn't need to pay attention to what their bank is doing. That is what regulators are for. Having to constantly review bank financial statements to determine whether you can have an account there is ridiculous.

wpietri 4y ago
For individuals, sure. Which is why I'm in favor of the FDIC system. It's a waste of time to make average people try to figure out the safety of particular banks just to be sure their $5k in checking is safe. For people managing millions of dollars, though, I think they should, y'know, do their jobs and make professional-grade risk management decisions. Especially when the alternative is taxpayers coughing up money to subsidize their mistakes.
- bombcar 4y ago
  It’s so rare that people ignore it. I’m surprised there aren’t insurance companies offering “fdic++” - I’m sure the underwriters could work out what it would have to be.
  - mindslight 4y ago
    https://www.difxs.com/ https://www.difxs.com/ for one. I learned about this today through the Nerdwallet link. It's small though and I'm surprised there hasn't been more talk of it and other optional deposit insurance. What does this landscape look like for large companies routinely doing millions in payroll? You can't tell me they sweep it all in/out of different banks in 250k chunks. There has to be some sort of widely used insurance offerings, no?
justin66 4y ago
> People shouldn't need to pay attention to what their bank is doing. There's a really nice threshold for measuring this: if you have more cash than can be spread conveniently amongst a number of banks such that those account balances do not exceed FDIC insurance limits, you do need to pay attention to what your bank is doing.
- jlmorton 4y ago
  I love how many here are suddenly pretending that every mid-sized business in America both can and should be able to perform a deep and ongoing due diligence of their bank, including I suppose various macro stress tests and Monte Carlo simulations, using the limited information available in public filings, and not only this, but that this absurdity is actually desirable. Please. This is not a serious argument.
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  - justin66 4y ago
    That's exactly what I was advocating for. Clever of you to read between the lines like that.
  - wpietri 4y ago
    If you have imagined an argument that is absurd, maybe that's more about what you're imagining than what people are thinking. You could say absolutely the same thing about buying stocks. By your logic, nobody should be allowed to buy stocks because it's just too darned complicated.
    - jlmorton 4y ago
      This is not the slam dunk analogy you think it is. Buying stocks is too darned complicated, which is why even the most astute, sophisticated hedge fund managers cannot beat an index fund on any significant timescale. Because even with all of the publicly-available information, and thorough analysis, you still cannot be sure what is happening internally at any particular company. Similarly, it is quite literally -- and I do mean this literally -- impossible for anyone to conduct a meaningful and ongoing analysis of their bank. This leaves basically three options: * Buy private insurance, which is a fool's errand, as there's no guarantee it would make you whole in the event of a major black swan event. * Split your account up into an absurd number of institutions. (You get FDIC insurance only per depositor, per account category, per institution. You can't open more accounts of the same category at the same institution). * Place all your money at one of the Systemically Important Banks, where you basically get unlimited insurance. Please explain what you thin the rational thing to do here is.
Ekaros 4y ago
If you have more than 250k in bank you probably entered territory of accredited investor and thus I would reasonably expect you to review your investments. Including bank deposits.

wpietri 4y ago

For individuals, sure. Which is why I'm in favor of the FDIC system. It's a waste of time to make average people try to figure out the safety of particular banks just to be sure their $5k in checking is safe. For people managing millions of dollars, though, I think they should, y'know, do their jobs and make professional-grade risk management decisions. Especially when the alternative is taxpayers coughing up money to subsidize their mistakes.

bombcar 4y ago
It’s so rare that people ignore it. I’m surprised there aren’t insurance companies offering “fdic++” - I’m sure the underwriters could work out what it would have to be.
- mindslight 4y ago
  https://www.difxs.com/ https://www.difxs.com/ for one. I learned about this today through the Nerdwallet link. It's small though and I'm surprised there hasn't been more talk of it and other optional deposit insurance. What does this landscape look like for large companies routinely doing millions in payroll? You can't tell me they sweep it all in/out of different banks in 250k chunks. There has to be some sort of widely used insurance offerings, no?

justin66 4y ago

> People shouldn't need to pay attention to what their bank is doing. There's a really nice threshold for measuring this: if you have more cash than can be spread conveniently amongst a number of banks such that those account balances do not exceed FDIC insurance limits, you do need to pay attention to what your bank is doing.

jlmorton 4y ago
I love how many here are suddenly pretending that every mid-sized business in America both can and should be able to perform a deep and ongoing due diligence of their bank, including I suppose various macro stress tests and Monte Carlo simulations, using the limited information available in public filings, and not only this, but that this absurdity is actually desirable. Please. This is not a serious argument.
- deleted 4y ago
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- justin66 4y ago
  That's exactly what I was advocating for. Clever of you to read between the lines like that.
- wpietri 4y ago
  If you have imagined an argument that is absurd, maybe that's more about what you're imagining than what people are thinking. You could say absolutely the same thing about buying stocks. By your logic, nobody should be allowed to buy stocks because it's just too darned complicated.
  - jlmorton 4y ago
    This is not the slam dunk analogy you think it is. Buying stocks is too darned complicated, which is why even the most astute, sophisticated hedge fund managers cannot beat an index fund on any significant timescale. Because even with all of the publicly-available information, and thorough analysis, you still cannot be sure what is happening internally at any particular company. Similarly, it is quite literally -- and I do mean this literally -- impossible for anyone to conduct a meaningful and ongoing analysis of their bank. This leaves basically three options: * Buy private insurance, which is a fool's errand, as there's no guarantee it would make you whole in the event of a major black swan event. * Split your account up into an absurd number of institutions. (You get FDIC insurance only per depositor, per account category, per institution. You can't open more accounts of the same category at the same institution). * Place all your money at one of the Systemically Important Banks, where you basically get unlimited insurance. Please explain what you thin the rational thing to do here is.

Ekaros 4y ago

If you have more than 250k in bank you probably entered territory of accredited investor and thus I would reasonably expect you to review your investments. Including bank deposits.